Connected TV (CTV) ad spending in the U.S. is projected to hit nearly $21 billion this year, and will grow at an annual rate of about 23% through 2030, reaching about $100 billion that year, according to a report released last week by the Wall Street equities research team at BMO Capital Markets.
"The growth of CTV advertising is the answer to the No. 1 topic we’ve been asked over the course our career," BMO analyst Daniel Salmon writes in the report, adding, "When will the inevitable growth of internet advertising disrupt TV ad budgets? Defined as use of a television to stream video over-the-internet, CTV sits at the crossroads of advertising transformation, bridging the signature traditional channel (television) and the fastest-growing digital format (video)."
The report, which comes just after GroupM issued an update of the U.S. advertising marketplace projecting a new category it defines as "CTV+" would hit about $9 billion this year, and far surpasses estimates and forecasts published by many others.
It's easy to make these sorts of predictions. Just take the current supposed number and draw a line tilting upwards-- slanting sharply upside ----and you have a headline grabbing prediction. OK, so let's say that we believe that by 2025 CTV will be getting $58 billion in ad revenues ( gross or net? ). What's the parallel forcast for poor old linear TV which by then will be reduced to a paltry 40% of all viewing---wow!, another forecast? Let's say that the estimate is $45 billion counting national and local---down from the current figure by about $20 billion. And AVOD---what about that? Many people are predicting growth to around $30-40 billion---some more. So if these predictions are right that means that "TV" ad spend will more than double in four years to $140 billion. Does that make sense? Maybe? Then again, one might assume that linear TV is so dying that even if it has 45 million "pay TV" subs plus another 16-18 million homes that get over-the-air signals, and even if the two ccount for 40% of all viewing, so what? "Linear TV" will lose every ad dollar. So give it zero. Now we are down to a total TV forcast of around $100 billion or a 50-55% gain in four years. That sounds more reasonable---doesn't it---or does it?
My point is that one must make such estimates in a total spending context and see if the results make sense---- not just for the sector highlighted but for all sectors that, together, comprise the whole. If one gains someone must lose---at least where share is concerned. Maybe this prediction will prove out---maybe not?Let's file it away, wait and see.
Congratulations BMO on a virtually linear 10-year forecast. Run your ruler across it .. 2025 seems to be an eighth of an inch out.
Anyone who has worked in media knows that long-term linear increases are rare (or non-existent) for nascent media channels. I'd be filing this one in the round filing cabinet.